AvalonBay’s attempt to have a Mercer County Superior Court judge order the town of Princeton to sign off on a demolition plan and issue building permits for its planned 280-unit rental complex was denied Tuesday. Judge Mary Jacobson, who has presided at other lawsuits involving the project planned for the old Princeton Hospital site, issued the judgment at a hearing in Trenton. She ordered lawyers for the developer and the municipality to attend at least one mediation session to see if issues can be ironed out.

“This is an important project for Princeton,” Judge Jacobson said at the conclusion of her remarks, adding that she hopes there can be “some compromises.”

AvalonBay brought the case against Princeton Council, Mayor Liz Lempert, and members of the municipal staff in May after Council mandated that the developer perform extra environmental testing at the site before demolition can begin. Preliminary preparations for the razing of the old hospital building have been underway for the past few months, including removal of asbestos and all interior furnishings. Underground storage tanks have also been taken out.

Though the Planning Board had approved the proposed project, Council voted to require additional testing once it was found С after the Planning Board’s decision С that a medical waste incinerator had once operated at the hospital. The governing body hired an independent consultant, Ira Whitman, who recommended more soil testing and sampling of concrete the company plans to crush and re-use at the site. Council included his recommendations as conditions in their approval of the plan.

During his argument in favor of a preliminary injunction, AvalonBay attorney Robert Kasuba said that the added testing is not required by the State Department of Environmental Protection, and no ordinance exists for this type of situation. He referred to the Council’s actions as “ad hoc decision making,” adding, “This is not the law in the State of New Jersey. If we open the door, that’s a real problem for the development industry in the state.”

Mr. Kasuba said that delaying the project would negatively affect those who might move into the 56 affordable housing units that are part of the complex, and Judge Jacobson cited that among her concerns. Despite the ruling in favor of the municipality, she made it clear that she found a lot of AvalonBay’s arguments persuasive. More than once, she cited the fact that there is no precedent for Council’s action.

In addition to attending mediation, the lawyers representing AvalonBay and the town of Princeton will exchange discovery. Should the judge ultimately rule against the municipality, she would allow the housing project to go forward without further environmental testing as ordered by Council. But the conditions laid out in the Planning Board’s approval would stand.

“We’re obviously pleased that Judge Jacobson denied AvalonBay’s request for a preliminary injunction,” said Princeton municipal attorney Trishka W. Cecil following the hearing. “We’re mindful of the concerns she expressed about how we went about this. But she did appear to understand the quandary the Council is in, and the health and safety concerns that have been raised.”